GF Securities: Incineration of waste highly matches the demand for AIDC. "Performance growth + valuation increase" Davis double click.

GF SEC released a research report stating that waste incineration is experiencing a "performance growth + valuation enhancement" Davis double hit. In the background of rising metal prices, the value of slag (containing copper, gold, silver, etc.) is being reassessed; steam heating benefits from increasingly strict carbon constraints and rising industrial demand, with low cost and high elasticity; the bank calculated that under the conditions of "slag price increase by 100 yuan/ton and all exported, steam supply ratio 10%, steam price 200 yuan/ton", using the expected net profit attributable to the mother in 2025 as the base, the performance elasticity of 12 listed waste incineration companies can reach an average of 44%, and will become a sustained source of performance for each company. At the same time, waste incineration, as a "green base load power source", has stable power supply and advantages in near-load location, highly matching the demand for Artificial Intelligence and Data Centers (AIDC). Based on the undervalued 2026 PE of the average A-share of 7-15 times and Hong Kong stocks of 5-8 times, performance will be enhanced by the synergies of slag, heating, and computing power, combined with the potential for dividend increases, the waste incineration industry will experience a Davis double hit. GF SEC's main points are as follows: Computing power synergy: High-quality HOLA assets, valuation reconstruction in progress This year's government work report for the first time mentioned "computing power synergy" as a national strategy. In the AI era, the strategic significance of green energy is constantly increasing, and there is a continuous explosion of rigid demand for stable, nearby, and low-cost green electricity. Waste incineration: (1) Authentic green electricity + full green certificates, in line with IDC green electricity requirements; (2) 24-hour continuous and stable output, is the "base load thermal power" in green electricity; (3) located in suburban areas of cities, naturally matched with zero-carbon parks/AIDC; (4) Projects such as Shanghai Liming have been approved, and leading companies are all advancing. Relying on the main business of waste incineration, the filing/construction/cooperation of computing power integrated projects is accelerating, with a combination of stable performance, high dividends, and low valuation. It is a high-quality green electricity asset with computing power synergy that has been seriously overlooked by the market. Slag resource utilization: Driven by the rise in metal prices, performance elasticity is released Non-ferrous metal prices have clearly risen, and the pricing system of the slag industry is beginning to be reshaped. Currently, the external sales price of slag is still generally only 10-40 yuan/ton. According to calculations, after slag sorting and disposal, the metal value contained exceeds 550 yuan/ton, and the resource attributes are undervalued. Leading companies have taken the lead in realizing price increase dividends, with Shengyuan Environmental Protection completing comprehensive re-tendering for slag in 25 years, with an average price increase to 120-130 yuan/ton, and some projects exceeding 200 yuan/ton. The bank calculated that if the slag price increases by 100 yuan/ton, and all is exported, the average profit elasticity of each listed company can reach 25%, and is expected to be transformed into a stable source of profit against the backdrop of a rising metal price center. Steam heating: Green energy with carbon reduction, cost-effectiveness Waste incineration steam, using solid waste as raw material, has natural emission reduction properties, and the value of green electricity continues to rise in the context of increasingly stringent carbon constraints. In terms of income, 1 ton of waste can produce approximately 2 tons of steam, and if used for power generation, the corresponding income is about 220 yuan/ton; if directly sold as steam, at a price of about 200 yuan/ton, approximately 400 yuan/ton income can be achieved, which is about 1.8 times that of the power generation mode, with better returns and more stable cash flow. Compared to natural gas and coal-fired heating, waste incineration steam has cost advantages and stable supply capabilities. In terms of profit, heating transformation does not require large-scale capital expenditures and has high marginal returns: assuming a 10% heating ratio, project net profit can increase by approximately 28% compared to pure power generation; if increased to 15%, profit enhancement can exceed 40%. Risk warning Orders and new business are lower than expected; policy change risks; risks of lower than expected dividends.